FTSE Falls, Pound Could Rise as BOE Seen on Track to Lift Rates Further After GDP

Pound Could Rise as BOE Seen on Track to Lift Rates Further After GDP

The Bank of England remains on track to raise interest rates two more times this year after the latest U.K. economic growth data and this should support sterling, UBS Global Wealth Management economist Dean Turner says. Notwithstanding the euro's recovery following the European Central Bank's signal of earlier rate rises last week, UBS still expects sterling to rise against the euro, he says. "The higher positive yield on sterling assets should continue to find favor amongst investors." The U.K. economy grew 1.0% quarter-on-quarter in the 2021 fourth quarter, the same as the previous quarter. Economists polled by the WSJ expected 1.1% growth. EUR/GBP falls 0.3% to 0.8404 after hitting a one-week low of 0.8393 earlier. GBP/USD is flat at 1.3554. ([e-mail])

 
Companies News: 

Victrex 1Q Revenue Rose, Full-Year Expectations Unchanged

Victrex PLC said Friday that revenue rose 9% in the first quarter of fiscal 2022, and that its expectations for the full year are unchanged at this early stage.

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MyCelx Technologies Says 2021 Revenue Rose, Sees Higher Demand on 2022

MyCelx Technologies Corp. said Friday that it expects revenue for 2021 to have increased and sees higher demand in 2022, driven by higher oil prices.

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Galileo Resources Shares Rise on Receipt of Proceeds From Phosphate Asset Sale, Zinc Royalties

Shares in Galileo Resources PLC rose in early trading Friday after it said that it has received 50.7 million rand ($3.3 million) from the sale by an investee of phosphate assets and mining rights at the Glenover mine in South Africa.

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Helical Chmn Richard Grant to Step Down in July; Richard Cotton Named Successor

Helical PLC said Friday that Richard Grant will be stepping down as chairman at the annual general meeting in July, and that he will be succeeded by Richard Cotton.

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Clean Power Hydrogen Trims London IPO to GBP30.5M

Clean Power Hydrogen PLC said Friday that it will raise 30.5 million pounds ($41.4 million) at its initial public offering in London, less than previously expected.

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Shell, BP Amassed Cash in 2021 as Energy Shortage Unfolded -- Talking Markets

High oil and gas prices boosted forecast-beating 2021 profits for Shell and BP, and are expected to continue doing so this year, allowing both U.K. energy giants to strengthen their balance sheets for energy-transition investments.

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Thungela Resources Sees Higher 2021 EPS and Headline EPS; Shares Rise

Thungela Resources Ltd. shares rose on Friday after the company said that it expects earnings and headline earnings per share to rise in 2021 as a result of higher revenue driven by an increase in coal prices.

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Osirium Technologies Shares Dive on Discounted GBP1 Mln Fundraising

Shares in Osirium Technologies PLC fell Friday after it announced a heavily discounted 1-million-pounds ($1.4 million) equity raise to grow the business.

 
Market Talk: 

ITM Power Seen on Cusp of Substantial Growth, But Valuation Looks Extreme

1109 GMT - ITM Power is on the cusp of substantial revenue growth, and its end markets are expected to continue to be supported by energy-transition-related government policy, RBC Capital Markets says. However, the London-listed hydrogen-technology company's valuation looks extreme even relative to industry peers, and cash constraints might cause headwinds, RBC says. CEO Graham Cooley told RBC that ITM will establish a second 2.5-gigawatt electrolyzer manufacturing facility outside of the U.K., and that growing competition from Chinese companies isn't a concern, the bank says. Cooley also said that ITM is happy with its partnership with engineering major Linde, and adding further partners isn't in its plans.

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Linde's 2022 Guidance Reassures After 4Q

1059 GMT - Linde reported a slight miss to fourth-quarter earnings expectations, but issued reassuring 2022 guidance, UBS says. The chemicals company posted 4Q Ebitda of $2.60 billion, 1% below consensus, but its sales of $8.30 billion were 6% ahead. Organic sales were strong, particularly in the Americas, where they rose 10%, with pricing up 3% and volumes 7% ahead, showing strong growth in manufacturing and food & beverage end markets, the Swiss bank says. Management expects adjusted EPS between $11.55 and $11.85 a share, with the mid-point of the range representing around 10% growth on year, around 1% below consensus, UBS adds. It keeps its buy recommendation on the stock and EUR350 target price. Shares in Frankfurt fall 1.8% to EUR267.75, after rising 3.0% on Thursday.

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UK Inflation Is Expected to Stay Above 5% Into 2023

1052 GMT - The Bank of England is likely to wrestle with above-target inflation heading into 2023, BlueBay Asset Management says. "We continue to look for U.K. inflation to surprise to the upside," BlueBay AM says. Inflation "seems destined" to remain above 5% heading into 2023, it says. The BOE's target for inflation is 2%. "Much has been made of the jump in household energy bills, while food and telecoms are set to be the next drivers of higher prices," BlueBay AM says. While U.K. inflation is set to remain stubbornly high into 2023, it expects eurozone inflation will be at, or close to, target at the end of this year.

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Higher UK Rates, Gilt Yields Look 'Inevitable'

1051 GMT - The only direction for U.K. interest rates and sovereign bond yields is upwards, says Mark Dowding, chief investment officer of BlueBay Asset Management. With inflation likely to remain stubbornly above 5% heading into 2023, or more than double the Bank of England's 2% target, "the only thing to prevent the Bank of England jamming rates higher is the fear that growth will already be derailed in the wake of a cost-of-living squeeze," he says. "Higher U.K. rates and higher gilt yields look to be inevitable, regardless of the growth consequences," he says. The 10-year gilt yield trades last at 1.522%, according to Tradeweb.

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Subdued UK Economic Growth in 4Q Hints at Weak 2022

1050 GMT - A weak end to the U.K.'s economic growth in 2021 reaffirms the looming challenges facing activity in the year ahead, Citi says. The GDP data for 4Q proved relatively subdued and suggest a limited bounce back as effects from the Omicron coronavirus variant dissipate, the U.S. bank says. Even though some recovery seems likely through 1H, activity is set to slow going forward as the economy faces combined headwinds from a squeeze on household incomes and a tightening of fiscal and monetary policy, it says. The Bank of England is likely to look through any deceleration for now, but with downside risks to the 2Q GDP forecast, demand concerns could grow more prominent as the year progresses, Citi says.

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Business Separation Might Be Attractive for Tate & Lyle

1045 GMT - Tate & Lyle's repositioning by becoming a business focused on food and beverage solutions and disposing of its primary-products subsidiary seems to be attractive and forecasts a pretax profit growth of 11%, Goodbody says. The provider of food-and-beverage ingredients said Friday that the split is expected to be completed in March 2022. The Irish brokerage says remaining F&B business is expected to deliver higher growth and higher-margin business with greater earnings consistency. Goodbody has a buy rating on the stock. Shares are up 6.14% at 732.60 pence.

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Shell Expected to Sustain Operating Cash Flow at $52 Bln

1034 GMT - Shell's latest strategy update highlighted its immense free-cash strength and strong progress in pursuing its energy-transition agenda, HSBC says. The U.K. bank expects Shell to generate cash flows from operations of around $52 billion in the next few years, broadly in line with 2021, although capital expenditure is expected to rise. In addition, clarity around the oil-and-gas major's transition strategy continues to increase, HSBC says, raising the target price by 8.5% to 2,170 pence. "While the near-term upside in Shell's share price may be somewhat limited... we think longer term upside could be more substantial as the company builds credibility as a key enabler of the energy transition."

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British American Tobacco's Seen Benefiting From Market's Refocused Attention on Tobacco

1019 GMT - Although British American Tobacco's investment into new category products is starting to show meaningful results, its key driver for revenue and profit still remains traditional products, interactive investor says. Still, the tobacco industry faces concerns--such as regulation over health benefits--and some investors have overlooked the industry on ethical grounds, the investment platform says. However this may change as recent market volatility and the rotation away from growth stocks into value has refocused attention on oil and tobacco stocks, interactive investor says. "With the company's own upbeat outlook predicting a continuation of current progress, and with new category products expected to maintain their ascent, the market consensus of the shares as a strong buy will almost certainly remain intact," interactive investor says.

Contact: London NewsPlus, Dow Jones Newswires; Write to Sarka Halas at [e-mail]

(END) Dow Jones Newswires

02-11-22 0738ET